China imposed sanctions on Skydio, banning the supply of critical components and batteries. The company is looking for new suppliers and has asked the Biden administration for help.
Skydio, the largest drone manufacturer in the United States and a supplier to Ukraine, has faced sanctions from Beijing, including a ban on Chinese groups from supplying it with critical components, the Financial Times reports, UNN writes.
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"Skydio is rushing to find alternative suppliers after Beijing's actions, which also blocked the supply of batteries from its sole supplier," people familiar with the situation said.
The drone manufacturer, according to the newspaper, has turned to the administration of US President Joe Biden for help. CEO Adam Brey, as noted, met with US Deputy Secretary of State Kurt Campbell last week and held talks with senior officials at the White House.
"U.S. officials are concerned that China is disrupting U.S. supply chains and supplying Ukraine with drones used for intelligence gathering," the article says.
"This is an eye-opening moment for the drone industry," Bry wrote in a note to clients obtained by the Financial Times. – "If there was ever any doubt, these actions make it clear that the Chinese government will use supply chains as a weapon to advance their interests at the expense of ours.
"This is an attempt to eliminate the leading American drone company and increase the world's dependence on Chinese drone suppliers," he added.
China's October 11 sanctions hit several U.S. groups, including privately held Skydio, in response to Washington's approval of the sale of attack drones to Taiwan. Skydio recently won a contract with Taiwan's fire agency.
Beijing imposed sanctions before Skydio managed to find alternative suppliers.
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One person familiar with the situation said that Chinese authorities visited Skydio's suppliers, including Dongguan Poweramp, a subsidiary of Japan's TDK that makes batteries for drones, and ordered them to cut ties.
Skydio on Wednesday told its customers that it is limiting the number of batteries shipped with drones due to China's actions and that it does not expect new suppliers until spring.
Skydio is in talks with companies in Asia, particularly Taiwan. One person familiar with the situation said U.S. officials have reached out to Asian allies to discuss ways to help the company. Skydio has also contacted Taiwan's Vice President Xiao Bi-him about the issue.
China's actions were announced as the US Congress is considering a bill that would ban Americans from flying drones manufactured by DJI, a Shenzhen-based company that dominates the global commercial drone industry.
"We suspect that Skydio was targeted by Beijing because it is likely seen as a competitor to DJI," said one US official. – "If there's a silver lining, we can use this episode to accelerate our work to diversify drone supply chains away from China.
In recent years, Beijing has imposed sanctions on several American defense companies, including Lockheed Martin, Raytheon, Boeing, and Anduril Industries, which have sent some attack drones to Taiwan.
